DELL’S Order Management System Submitted by: Prajwal Khanal

DELL’s Order Management System

1. Why do you think DELL chooses to have factories in the five different countries - two
factories in the US and others in four different countries?

I think DELL chooses to have factories in the five different countries because:

• It wanted to expand it sales: - Companies sales are dependent on two factors: the
consumer interest in their product and consumer willingness and ability to buy
them. The number of people and the amount of their purchasing power are higher
for the world as a whole than for a single country.

• To acquire resources: - Manufacturers and distributors seek out products, services,

and components produced in foreign countries. They also look for foreign capital,
technologies, and information they can use at home or any of their facilities
abroad. Sometimes they do this to reduce their cost. For example: Dell buys the
computer components from its SLC’s in countries like Philippines, Costa Rica,
China, Taiwan, Korea, etc which are known for producing such goods at low cost
than other countries. This makes either the profit margin to rise or the cost saving
may be passed on to the consumer, who will in turn buy more products. Dell may
also be producing abroad because, sometimes company need to acquire service
not readily available within America i.e. DELL’s home country.

• To diversify their sources of sales and supplies: - This could be a very important
reason for DELL to have factories in several nations. To avoid huge fluctuation in
sales and profits, DELL may have been seeking out foreign markets and sources
of supplies. Recession and expansion in different countries occur at different
times so sales decrease in a country that is in recession and increase in the one
which is expanding economically. From the case we can see that DELL has been
acquiring same products from different countries by which they have been able to
avoid the impact of price swings or shortages in any one country.

• To minimize the competitive risk: - Companies fear that another firm might
generate large profits from a given foreign market if it is left alone to serve that
market. So to better serve the market DELL might have setup factories in a
country and serve that country and the nearby ones in a better way. But if the
market is left alone the competitors may grasp it and use the profits in various
ways such as additional advertising, or development of improved products.

Except for all these reasons there are few more reasons for DELL to setup
factories in 5 nations. The reasons are: -
DELL’S Order Management System Submitted by: Prajwal Khanal

• Suppliers Logistics Centre’s nearby

• Cheap labor
• Low tax rates
• Good infrastructure
• Skilled labor.
Since US is where Dell’s started its operation and is its largest market i.e. largest portion
of Dell’s manufactured PC’s are sold in US so it has got 2 factories in the US.

1. What factors do you think has made it possible for a company like DELL to conduct this
type of symphony – like international order management system? Could this all have
been possible 30 years before? What would have been the possible hurdles then?

The factors that have made DELL able to conduct such symphony of International order
management system possible are: -
• Rapid increase in and expansion of technology: - As we can see in the case that
by dialing Dell’s 800 number or by just placing an order on dell.com people can
have the product at their door step within 4 days. This has been possible because
of the growth in technology expertise. One more thing is that, communication
enable control from far so people or managers at Dell can manage the production
or manufacturing of a product by sitting thousand’s of kilometer apart.

• Liberalization of government policies regarding cross border movement of trade

and resources: - lower governmental barriers to the movement of goods, services
and resources has enabled companies to take better advantage of international
opportunities. The reasons for liberalization could be: -

 The citizens have expressed the desire for better access to a

greater variety of goods and services at lower prices.
 The domestic producers may become more efficient as a result of
foreign competition
 Hope of a country that other countries may reduce their trade
barriers as well.

• Development of institutions needed to support and facilitate the flow of goods: -

Development of various banks, money transfer, courier’s etc have facilitated Dell
in several ways like for payment receiving and transferring by banks and money
transfer companies, timely delivery by UPS at the customers doorstep, mass
delivery of goods via China Air 747 Boeing. These factors have had a huge role
to play in Dell’s symphony of international order management.

This wouldn’t have been possible 30 years back because then there was no faxing, e-
mailing, internet, teleconferencing, and not even ISD telephone by which we can directly
DELL’S Order Management System Submitted by: Prajwal Khanal

dial to foreign countries now. Today the things are different communication are
instantaneous and cheaper. Governments today impose fewer restrictions on cross border
movements than they did 30 years ago. Thirty years back there were no such institutions
that could ship thousands of laptops from one country to other to the customers doorstep
with 4 days. Finally, then people could not even imagine 400 companies working
together to make such sophisticated product of customer choice and place it to the
customer within 4 days.

1. Why do you think DELL parts are sourced from suppliers from so many different
countries? Does that going have any direct implications for their overall pricing and
quality.

There are several reasons for Dell parts to be sourced from suppliers from different
countries. The reasons are: -
• Different countries specialize in different products: - One reason could be that for
producing a certain part of a product China is more efficient and effective and for
producing some other part Costa Rica is more efficient and effective.
• Relationship with suppliers: - It could also be that Dell maintains excellent
relationship with many suppliers who because of the relationship and business
volume readily supply quality parts at a cheaper rate.
• To stave of possible short supply: - For instance If a country faces economic
downturn than if dell’s only supplier is from that country than dell won’t be able
to assemble good’s and sell them to its competitors so to stave off possibility of
short supply dell parts are sourced from suppliers from multiple countries.

These reasons have direct implication for the overall pricing and quality of dell products.
A countries specialization on certain product means that the country produces good
quality product at cheaper cost. Good relationship with the suppliers also determines how
cheaply and quickly the company could obtain the parts.

1. What would have happened to DELL if they didn’t have a dynamic order management
system like they have now? Do you think they would have been able to maintain their
competitive edge vis-à-vis other personal computer manufacturers.

If Dell didn’t have a dynamic order management system like they have now they
wouldn’t have been able to make the image that they have now in the world. Dell could
have been stuck inside America and may not have had a reach like it has now. Dell would
have been known as any other laptop company i.e. it would not have differentiation
advantage like it has now. The pressure of increased foreign competitors may have
DELL’S Order Management System Submitted by: Prajwal Khanal

destroyed Dell. Custom made laptop’s is what Dell offers to its customers but the
company may not have been able to rejoice over it and enjoy it as its tool of competitive
advantage if they had no dynamic order management system.

I personally don’t think that dell would have been able to maintain its competitive
advantage with other companies because the main thing that differentiates Dell and the
major competitive advantage tool used by Dell would not have been there. Like I’ve
already mentioned, dell would be like any other personal computer manufacturers
without any advantage over them. With no such dynamic order management system Dell
would not be able to target the world market as a whole like it is doing now.